The Bank of Canada has been telling us that rates are going to move. And now they have… officially. Ahead of the BoC’s July 12th announcement, Canada’s “Big Banks” nudged-up mortgage rates, adding 0.05% to 0.20% or in other words, increasing rates 5 to 20 basis points.
This increase is seen as a confirmation that our economy is getting stronger and not just sputtering along. This measure is a “bump” not a “jump.” And yes, we can expect to see some sensitivity in real estate markets as people get used to different rates. But remember, the BoC is making a statement and it’s not likely a trend, as inflation, the usual reason for a rate increase, doesn’t seem to be a factor.
Higher rates will likely support the strength of our dollar. Great for summer travel to the U.S. but over the next few months we’ll see how the rate increase affects our trade balance sheet as exporters may feel a bit of a squeeze.
Even with this nudge up, economists predict that it may be another decade or more until we see rates where they were at the turn of the century. And that was nowhere near where they were in the 70’s or 80’s.
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